There is a need for new reagents for the production of optically pure pharmaceuticals. For this purpose, we propose to evaluate and develop a new biphasic biocatalyst system for organic synthesis. The general objective is to develop a methodology in which cofactor dependent enzymes can be used in organic solvents for the stereospecific production of high value compounds such as pharmaceuticals. The specific Phase I objective is to demonstrate that horse liver alcohol dehydrogenase (HLADH), along with its cofactor nicotinamide adenine dinucleotide (NADH), can be immobilized in a hydrogel and operate in diethyl ether to produce optically pure compounds from optically inactive precursors. Phase II will develop this new synthetic methodology into general procedures for the low cost production of pharmaceutical and agricultural compounds using cofactor dependent oxido-reductase enzymes in organic solvents. The three researchers submitting this proposal have collaborated successfully to develop an immobilized, cofactor independent, enzyme system for stereoselective hydrolysis and transesterification in organic solvents.